How can liquidity risk be monitored?


1 Answer(s)


Liquidity risk is a Financial Institutions capacity to meet it's cash and collateral obligations without incurring unacceptable losses. To manage this risk an organization must 1) prospectively assess the need for funds to meet obligations and 2) ensure the availability of cash or collateral to fulfill those needs at the appropriate time by coordinating the various sources of funds available to the institution under normal and stressed conditions.